Competition law, also known as antitrust law in certain jurisdictions, is a body of regulations designed to promote fair competition and protect consumers from anti-competitive practices. Its core objectives include preventing market distortions, fostering innovation, and ensuring a level playing field for businesses.
Key Principles and Components:
– Prohibition of Anti-Competitive Agreements: These include cartels, price-fixing, market sharing, and bid-rigging, where competitors collude to manipulate markets.
– Abuse of Dominant Position: Firms with substantial market power are restricted from engaging in practices like predatory pricing, exclusive dealing, or tying arrangements that harm rivals or consumers.
– Merger Control: Authorities review mergers and acquisitions to block those that could substantially lessen competition, potentially leading to monopolies.
– State Aid and Public Policy: In some regions, rules address government subsidies or interventions that distort competition.
Major Frameworks:
– United States: Enforced through the Sherman Act (1890) and Clayton Act (1914), targeting monopolistic behaviors and mergers.
– European Union: Governed by Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU), emphasizing single-market integrity.
– Global Perspective: Organizations like the World Trade Organization (WTO) and International Competition Network (ICN) facilitate international cooperation, with many countries adapting laws based on these standards.
Enforcement typically involves regulatory bodies, such as the U.S. Federal Trade Commission (FTC), European Commission, or national competition authorities, which investigate complaints, impose fines, and mandate remedies to restore competition. This framework ultimately drives economic efficiency, consumer welfare, and innovation.
Table of contents
- Part 1: Create an amazing competition law quiz using AI instantly in OnlineExamMaker
- Part 2: 20 competition law quiz questions & answers
- Part 3: OnlineExamMaker AI Question Generator: Generate questions for any topic
Part 1: Create an amazing competition law quiz using AI instantly in OnlineExamMaker
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Part 2: 20 competition law quiz questions & answers
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1. Which of the following is an example of a horizontal agreement in competition law?
A. An agreement between a manufacturer and its distributor
B. An agreement between two competing manufacturers to fix prices
C. An agreement between a supplier and a buyer
D. An agreement for exclusive distribution rights
Answer: B
Explanation: Horizontal agreements occur between competitors at the same level of the supply chain, such as price-fixing, which restricts competition and is generally prohibited under laws like Article 101 of the TFEU.
2. What is the primary purpose of merger control under competition law?
A. To promote international trade
B. To prevent mergers that could substantially lessen competition
C. To encourage business growth through acquisitions
D. To regulate employee wages in merged entities
Answer: B
Explanation: Merger control aims to assess whether a merger could lead to a dominant position or reduce competition, as seen in regulations like the Hart-Scott-Rodino Act in the US.
3. Under EU competition law, what constitutes an abuse of a dominant position?
A. A company holding a market share above 50%
B. A dominant firm engaging in predatory pricing to eliminate rivals
C. A firm entering into exclusive supply agreements
D. A company advertising its products aggressively
Answer: B
Explanation: Abuse of dominance, as prohibited by Article 102 of the TFEU, includes practices like predatory pricing that unfairly exploit a dominant market position to harm competition.
4. Which authority primarily enforces competition law in the United States?
A. The Securities and Exchange Commission
B. The Federal Trade Commission and the Department of Justice
C. The Internal Revenue Service
D. The Consumer Financial Protection Bureau
Answer: B
Explanation: The FTC and DOJ are responsible for enforcing antitrust laws, such as the Sherman Act and Clayton Act, to maintain competitive markets.
5. What is a tying arrangement in competition law?
A. Selling two products together as a package
B. Allowing customers to choose products freely
C. Merging two companies into one
D. Advertising products at a discount
Answer: A
Explanation: Tying involves conditioning the sale of one product on the purchase of another, which can be anti-competitive if it forecloses competition, as addressed in cases under Section 1 of the Sherman Act.
6. In competition law, what does the term “concerted practices” refer to?
A. Independent actions by a single firm
B. Coordination between companies that falls short of a formal agreement
C. Government-imposed regulations
D. Price reductions by a dominant firm
Answer: B
Explanation: Concerted practices involve implicit coordination between competitors to influence the market, prohibited under laws like Article 101 of the TFEU, as they distort competition.
7. Which of the following is not a defense in cartel cases?
A. Efficiency gains
B. The cartel was formed to benefit consumers
C. The agreement was necessary for technical reasons
D. The cartel increased profits for members
Answer: D
Explanation: Increasing profits for members is not a valid defense for cartels, as competition law focuses on preventing anti-competitive effects, regardless of internal benefits.
8. What is the “rule of reason” approach in US antitrust law?
A. Automatically prohibiting all agreements
B. Assessing whether an agreement unreasonably restrains trade
C. Applying strict liability to dominant firms
D. Exempting small businesses from scrutiny
Answer: B
Explanation: The rule of reason evaluates the pro-competitive and anti-competitive effects of an agreement, as opposed to per se rules, to determine if it violates the Sherman Act.
9. Under competition law, what is a relevant market?
A. The entire global economy
B. The specific product and geographic area where competition occurs
C. Only the domestic market of a country
D. The stock market where companies are listed
Answer: B
Explanation: Defining the relevant market helps assess market power and competition, as used in merger reviews by authorities like the European Commission.
10. Which practice is considered resale price maintenance?
A. A manufacturer setting the minimum price for resellers
B. A retailer offering discounts voluntarily
C. A company reducing its own production costs
D. A firm exporting goods at lower prices
Answer: A
Explanation: Resale price maintenance involves fixing the price at which resellers can sell products, which can restrict competition and is often illegal under laws like the Sherman Act.
11. What does the Clayton Act in the US primarily address?
A. Price-fixing agreements
B. Mergers and acquisitions that may substantially lessen competition
C. Intellectual property rights
D. Environmental regulations
Answer: B
Explanation: The Clayton Act targets anti-competitive mergers and practices in their incipiency, preventing them before they cause harm to competition.
12. In EU law, when is a state aid considered compatible with the internal market?
A. If it distorts competition in favor of certain undertakings
B. If it promotes common European objectives without undue distortion
C. If it is granted to all companies equally
D. If it increases government revenue
Answer: B
Explanation: State aid must be assessed under Article 107 of the TFEU; it is compatible if it serves public policy goals like regional development without significantly distorting competition.
13. What is the leniency program in competition law?
A. A policy to leniently punish first-time offenders
B. A program allowing cartel members to report in exchange for reduced penalties
C. Exemptions for small businesses from fines
D. Government subsidies for compliant firms
Answer: B
Explanation: Leniency programs encourage whistleblowing on cartels by offering immunity or reduced fines, as implemented by agencies like the DOJ and EU Commission.
14. Which of the following is an example of a vertical restraint?
A. Two airlines agreeing to fix ticket prices
B. A car manufacturer requiring dealers to sell only its brand
C. Oil companies colluding on output levels
D. Banks fixing interest rates together
Answer: B
Explanation: Vertical restraints involve restrictions in the supply chain, such as exclusivity agreements, which may be analyzed under the rule of reason for their competitive effects.
15. What is predatory pricing?
A. Setting prices below average cost to drive out competitors
B. Increasing prices to maximize profits
C. Offering seasonal discounts
D. Charging different prices in different regions
Answer: A
Explanation: Predatory pricing is a strategy where a dominant firm sells below cost to eliminate rivals, potentially leading to monopoly, and is prohibited under competition laws like Article 102 of the TFEU.
16. Under competition law, what is a market dominance threshold in the EU?
A. Any company with over 10% market share
B. Typically, a market share above 40-50%, depending on context
C. All companies with international operations
D. Companies with more than 100 employees
Answer: B
Explanation: While not fixed, a market share above 40-50% often indicates dominance, triggering scrutiny under Article 102 for potential abuse.
17. Which agreement is likely to be exempt under competition law?
A. A price-fixing cartel among rivals
B. A research and development agreement that benefits innovation
C. An agreement to divide territories between competitors
D. Collusion to boycott suppliers
Answer: B
Explanation: Certain agreements, like those promoting efficiency or innovation, may be exempt if their benefits outweigh anti-competitive effects, as per block exemption regulations in the EU.
18. What role does the World Trade Organization play in competition law?
A. It enforces global antitrust rules directly
B. It promotes discussions on competition policy through agreements like the plurilateral on trade
C. It regulates all international mergers
D. It has no involvement in competition law
Answer: B
Explanation: The WTO facilitates trade rules that indirectly support competition, though it does not have a comprehensive enforcement mechanism for antitrust.
19. In competition law, what is a “plus factor” in proving a conspiracy?
A. Direct evidence of an agreement
B. Circumstantial evidence suggesting coordination beyond parallel behavior
C. The size of the companies involved
D. The duration of the market activity
Answer: B
Explanation: Plus factors are additional evidence that turns parallel conduct into proof of conspiracy, as used in US courts under the Sherman Act.
20. What is the effect of a competition law violation on consumers?
A. It generally leads to lower prices and more choices
B. It can result in higher prices, reduced innovation, and less choice
C. It has no direct impact on consumers
D. It only affects business profits
Answer: B
Explanation: Anti-competitive practices harm consumers by reducing options, increasing costs, and stifling innovation, which is the core rationale for enforcing competition laws.
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